Should I pay my Early Repayment Charge?
As there is so much going on this month, we thought we would give a second October Remortgage Market Update. One of the most frequent questions we are currently asked is should I pay my Early Repayment Charge and remortgage as soon as possible?
With interest rates predicted to rise in the months ahead, is it worth swallowing early repayment charges to remortgage now?
Adam Nanson, Impartial Mortgage Broker at Your Mortgage Expert comments:
“An Early Repayment Charge is a common fee built into fixed term mortgages. It means that, if you want to exit your mortgage within the fixed term, you have to pay a fee in order to do so.
“The idea of an ERC is that you are fixed into your mortgage for the required term. And it puts in place a disincentive for you exiting your mortgage early.
“Many of our clients are asking us at the moment whether they should take the hit from the ERC in order to secure a new mortgage rate now. With the concern that interest rates might rise in the future meaning it might cost them more when their fixed term eventually does end.
The most important thing to remember is that none of us has a crystal ball. And, while there have been a lot of market predictions, none of us know what is going to happen with mortgage rates over the next year.
“You also need to consider how much your Early Repayment Charge is likely to be. An ERC can be thousands of pounds, but some can reduce during the course of your mortgage.
“If you are considering whether you should pay your ERC and remortgage now we would advise you speak to a mortgage broker like us first.
“We can take a look at your existing mortgage and see how much your ERC will be. We can also do calculations to provide an accurate comparison of the costs involved in moving to a new lender vs staying with your existing lender.”
If this article about should I pay my early repayment charge has raised any questions or concerns, please do get in touch.
The information contained within this article was correct at the time of publication. It is intended for information only and does not constitute advice. Your Mortgage Expert Ltd and Mortgage Advice Bureau cannot be held responsible for information that was correct at the time of publication but subsequently changes or goes out of date due to changes in legislation.
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